Document

EX-99.1 2 exhibit991-3q21earningspre.htm EX-99.1 Document


						Exhibit 99.1 State Street Corporation One Lincoln Street Boston, MA 02111 NYSE: STT www.statestreet.com

Boston, MA… October 18, 2021 News Release


STATE STREET REPORTS THIRD QUARTER 2021 EPS OF $1.96; $2.00 EXCLUDING NOTABLE ITEMS(a)
% changes noted below reflect year-over-year 3Q comparisons

TOTAL FEE REVENUE UP 9%

STRONG SERVICING AND MANAGEMENT FEE GROWTH OF 7% AND 10%

ACHIEVED NEW INVESTMENT SERVICING WINS OF $1.7 TRILLION

EXPENSES UP 1%; FLAT EX-NOTABLES(a)

PRE-TAX MARGIN OF 29.3%; 29.9% EX-NOTABLES(a)

ROE OF 11.6%, UP 2.7% POINTS


Ron O'Hanley, Chairman and Chief Executive Officer: "As we continued to execute against our strategic priorities, our team delivered yet another strong set of results in the third quarter across our business and made measurable progress towards our recently enhanced medium-term financial targets. Robust revenue growth, continued expense discipline and productivity management resulted in strong year-over-year pre-tax margin expansion and earnings growth. Our differentiated solutions and operational capabilities are yielding client benefits across the franchise, as evidenced by another strong quarter of AUC/A servicing wins and a record quarterly revenue performance at Global Advisors." O'Hanley added: "We announced in the third quarter our intention to acquire BBH Investor Services, which will further strengthen our competitive positioning and market leadership in asset servicing, deepen our international reach, propel our Alpha strategy and create long-term value for our shareholders."

FINANCIAL HIGHLIGHTS


(Table presents summary results, dollars in millions, except per share amounts, or where otherwise noted)	3Q21			2Q21			3Q20			% QoQ			% YoY
Income statement:
Total fee revenue	$	2,504		$	2,514		$	2,306		—	%		9	%
Net interest income	487			467			478			4			2
Other income	(1)			53			—			nm			nm
Total revenue	2,990			3,034			2,784			(1)			7
Provision for credit losses	(2)			(15)			—			(86.7)			nm
Total expenses	2,116			2,111			2,103			—			1
Net income	714			763			555			(6)			29

Financial ratios and other metrics:
Diluted earnings per share (EPS)	$	1.96		$	2.07		$	1.45		(5)	%		35	%
Return on average common equity (ROE)	11.6		%	12.6		%	8.9		%	(100)		bps	270		bps
Pre-tax margin	29.3			30.9			24.5			(160)			480
AUC/A ($ billions)(1)	43,337			42,597			36,643			2	%		18	%
AUM ($ billions)(1)	3,862			3,897			3,148			(1)			23

(1) As of period-end.

(a) See "3Q21 Highlights" in this news release for a listing of notable items. Results excluding notable items and/or currency translation impact are non-GAAP measures. Please refer to the Addendum included with this news release for an explanation and reconciliation of non-GAAP measures.

Investor Contact: Ilene Fiszel Bieler +1 617-664-3477 Media Contact: Carolyn Cichon +1 617-664-8672

3Q21 HIGHLIGHTS

(all comparisons are to 3Q20, unless otherwise noted)

AUC/A and AUM

•Investment Servicing AUC/A as of quarter-end increased 18% to $43.3 trillion, primarily due to higher market levels, client flows, and net new business growth

•Investment Management AUM as of quarter-end increased 23% to $3.9 trillion, mainly reflecting higher market levels and net inflows from ETFs and cash, partially offset by institutional net outflows

New business and strategy execution

•Investment Servicing mandates announced in 3Q21 totaled $1.7 trillion, with quarter-end servicing assets to be installed in future periods of $2.7 trillion

◦Strong servicing wins across client segments and regions, with State Street AlphaSM representing a large proportion of wins in 3Q21

•Reported three new Alpha mandates in 3Q21, with seven live Alpha client mandates as of the end of 3Q21

•Charles River Development (CRD) achieved record new bookings of $28 million and attained annual recurring revenue (ARR)(a) of $239 million in 3Q21, up 12%

•Completed the acquisition of Mercatus and launched State Street Alpha for Private Markets

•Investment Management business drove record revenues with continued strong ETF net inflows

•Announced the proposed acquisition of Brown Brothers Harriman (BBH) Investor Services, which will strengthen State Street's market leadership in asset servicing, deepen international reach, and propel the Alpha strategy

Revenue

•Fee revenue increased 9%, reflecting growth in all businesses:

◦Servicing fees increased 7%

◦Management fees increased 10%

◦FX trading services increased 3%

◦Securities finance increased 26%

◦Software and processing fees increased 15%, mainly reflecting higher CRD revenues

•Net interest income (NII) increased 2%, primarily driven by higher loan balances and growth in the investment portfolio and deposits, as well as the absence of a 3Q20 true-up,(b) partially offset by lower investment portfolio yields

Expenses

•Total expenses increased 1%, primarily reflecting the impact of notable items and currency translation; total expenses were flat, excluding notable items(c)

◦Significant productivity savings have offset higher revenue-related expenses and investments to support client onboarding, operations, as well as technology and product innovation

•Generated positive operating leverage of 6.8% points; 7.4% points excluding notable items(c)

(a) See the endnotes included in the "In This News Release" section for explanations of CRD bookings and annual recurring revenue (ARR).

(b) 3Q20 NII of $478 million included a true-up of approximately $(20) million related to prior periods.

(c) Results excluding notable items and/or currency translation impact are non-GAAP measures. Please refer to the Addendum included with this news release for an explanation and reconciliation of non-GAAP measures.

Notable items


(Dollars in millions, except EPS amounts)	3Q21		2Q21		3Q20






Other income(a)	—		53		—
Acquisition and restructuring costs	(18)		(11)		(15)
Legal and other costs(b)	—		11		9
Notable items (pre-tax)	$	(18)	$	53	$	(6)



EPS impact	$	(0.04)	$	0.10	$	—

Capital

•In September 2021, State Street announced a temporary suspension of its share repurchase program and raised $1.9 billion of capital through a common stock issuance to finance the proposed acquisition of BBH Investor Services. State Street intends to resume its share repurchase program during 2Q22

•Standardized Common Equity Tier 1 (CET1) of 13.5% increased 1.1% points and 2.3% points compared to 3Q20 and 2Q21, respectively

•Tier 1 leverage ratio of 6.3% decreased (0.3)% compared to 3Q20, but increased 1.1% points compared to 2Q21

•ROE of 11.6% increased 2.7% points compared to 3Q20, but decreased (1.0)% points compared to 2Q21

•In 3Q21, State Street returned a total of $179 million of capital to shareholders in the form of common stock dividends paid

◦Declared a 10% increase to 3Q21 quarterly common stock dividends payable in 4Q21

(a) $53 million in 2Q21 included in Other income, reflecting a gain on sale of a majority interest in our Wealth Manager Services business.

(b) Legal and other benefits of $11 million in 2Q21 and $9 million in 3Q20 included in Other expenses.

MARKET DATA

The following table provides a summary of selected financial information, including market indices and foreign exchange rates.


(Dollars in billions, except market indices and foreign exchange rates)	3Q21		2Q21		3Q20		% QoQ		% YoY

Assets under Custody and/or Administration (AUC/A)(1)(2)	$	43,337	$	42,597	$	36,643	1.7	%	18.3	%
Assets under Management (AUM)(2)	3,862		3,897		3,148		(0.9)		22.7

Market Indices:(3)
S&P 500 Daily Average	4,422		4,184		3,320		5.7		33.2
S&P 500 EOP	4,308		4,298		3,363		0.2		28.1
MSCI EAFE Daily Average	2,338		2,307		1,871		1.3		25.0
MSCI EAFE EOP	2,281		2,305		1,855		(1.0)		23.0
MSCI Emerging Markets Daily Average	1,295		1,351		1,084		(4.1)		19.5
MSCI Emerging Markets EOP	1,253		1,375		1,082		(8.9)		15.8
Barclays Capital Global Aggregate Bond Index EOP	536		541		541		(0.9)		(0.9)

Foreign Exchange Volatility Indices:(3)
JPM G7 Volatility Index Daily Average	6.0		6.3		8.0		(4.8)		(25.0)
JPM Emerging Market Volatility Index Daily Average	8.7		9.4		10.9		(7.4)		(20.2)

Average Foreign Exchange Rate:
EUR vs. USD	1.179		1.205		1.169		(2.2)		0.9
GBP vs. USD	1.378		1.398		1.292		(1.4)		6.7

(1) Includes assets under custody of $32,364 billion, $31,947 billion, and $27,333 billion, as of EOP for 3Q21, 2Q21, and 3Q20, respectively.

(2) As of period-end.

(3) The index names listed in the table are service marks of their respective owners.

INDUSTRY FLOW DATA

The following table represents industry flow data.


(Dollars in billions)	3Q21		2Q21		1Q21		4Q20		3Q20
North America - (US Domiciled) Morningstar Direct Market Data:(1)(2)
Long Term Funds	$	130	$	196	$	165	$	74	$	21
Money Market	21		33		156		(82)		(166)
ETF	103		123		148		120		60
Total Flows(3)	$	254	$	351	$	470	$	112	$	(84)

EMEA - Morningstar Direct Market Data:(1)(4)
Long Term Funds	$	213	$	226	$	237	$	250	$	134
Money Market	48		(10)		(91)		59		60
ETF	37		51		54		48		32
Total Flows(3)	$	298	$	267	$	200	$	357	$	227

(1) Industry data is provided for illustrative purposes only. It is not intended to reflect State Street or its clients' activity and is indicative of only segments of the entire industry. Industry flow data presented reflects a change in data providers from previous presentations for all periods presented. See endnotes included in the "In This News Release" section.

(2) 3Q21 data for North America includes actuals for July and August 2021 and Morningstar estimates for September 2021.

(3) Line items may not sum to total due to rounding.

(4) 3Q21 data for Europe is on a rolling three month basis for June 2021 through August 2021, sourced by Morningstar.

INVESTMENT SERVICING AUC/A

The following table presents AUC/A information by product and financial instrument.


(Dollars in billions)	3Q21		2Q21		3Q20		% QoQ		% YoY
Assets Under Custody and/or Administration(1)(2)
By Product Classification(3):
Mutual funds	$	11,505	$	10,873	$	9,183	5.8	%	25.3	%
Collective funds, including ETFs	15,159		15,048		12,204		0.7		24.2
Pension products	8,497		8,291		7,317		2.5		16.1
Insurance and other products	8,176		8,385		7,939		(2.5)		3.0
Total Assets Under Custody and/or Administration	$	43,337	$	42,597	$	36,643	1.7	%	18.3	%
By Financial Instrument:
Equities	$	25,350	$	24,792	$	20,094	2.3	%	26.2	%
Fixed-income	12,808		13,079		12,403		(2.1)		3.3
Short-term and other investments	5,179		4,726		4,146		9.6		24.9
Total Assets Under Custody and/or Administration	$	43,337	$	42,597	$	36,643	1.7	%	18.3	%

(1) As of period-end.

(2) Consistent with past practice, AUC/A values for certain asset classes are based on a lag, typically one-month.

(3) Certain previously reported amounts presented have been reclassified to conform to current-period presentation.

INVESTMENT MANAGEMENT AUM

The following tables present 3Q21 activity in AUM by product category.


(Dollars in billions)	Equity		Fixed- Income		Cash		Multi-Asset Class Solutions		Alternative Investments(1)		Total
Beginning balance as of June 30, 2021	$	2,461	$	610	$	381	$	207	$	238	$	3,897
Net asset flows:
Long-term institutional(2)	(10)		—		—		4		—		(6)
ETF	12		4		—		—		(3)		13
Cash fund	—		—		(12)		—		—		(12)
Total flows, net	$	2	$	4	$	(12)	$	4	$	(3)	$	(5)
Market appreciation/(depreciation)	(13)		(1)		(1)		(1)		4		(12)
Foreign exchange impact	(10)		(3)		(1)		(1)		(3)		(18)
Total market and foreign exchange impact	$	(23)	$	(4)	$	(2)	$	(2)	$	1	$	(30)

Ending balance as of September 30, 2021	$	2,440	$	610	$	367	$	209	$	236	$	3,862

(1) Includes real estate investment trusts, currency and commodities, including SPDR® Gold Shares and SPDR® Gold MiniSharesSM Trust, for which we are not the investment manager but act as the marketing agent.

(2) Amounts represent long-term portfolios, excluding ETFs.


(Dollars in billions)	3Q21		2Q21		1Q21		4Q20		3Q20
Beginning balance	$	3,897	$	3,591	$	3,467	$	3,148	$	3,054
Net asset flows:
Long-term institutional(1)	(6)		55		(8)		(71)		(8)
ETF	13		21		23		20		1
Cash fund	(12)		7		24		30		(58)
Total flows, net	$	(5)	$	83	$	39	$	(21)	$	(65)
Market appreciation/(depreciation)	(12)		224		116		306		136
Foreign exchange impact	(18)		(1)		(31)		34		23
Total market and foreign exchange impact	$	(30)	$	223	$	85	$	340	$	159

Ending balance	$	3,862	$	3,897	$	3,591	$	3,467	$	3,148

(1) Amounts represent long-term portfolios, excluding ETFs.

REVENUE


(Dollars in millions)	3Q21			2Q21			3Q20			% QoQ			% YoY
Servicing fees	$	1,395		$	1,399		$	1,301		(0.3)	%		7.2	%
Management fees(a)	526			504			479			4.4			9.8
Foreign exchange trading services(a)	279			286			270			(2.4)			3.3
Securities finance revenue	106			109			84			(2.8)			26.2
Software and processing fees	198			216			172			(8.3)			15.1
Total fee revenue	$	2,504		$	2,514		$	2,306		(0.4)	%		8.6	%

Net interest income	487			467			478			4.3	%		1.9	%
Other income	(1)			53			—			nm			nm
Total Revenue	$	2,990		$	3,034		$	2,784		(1.5)	%		7.4	%

Net interest margin (FTE)(b)	0.76		%	0.71		%	0.85		%	5		bps	(9)		bps

Servicing fees increased 7% compared to 3Q20, primarily driven by higher average equity market levels, client activity and flows, and net new business, partially offset by normal pricing headwinds. Servicing fees were flat compared to 2Q21, mainly due to higher average equity market levels, client activity and flows, which were offset by currency translation.

Management fees(a) increased 10% compared to 3Q20, primarily reflecting higher average equity market levels and net inflows from ETFs, partially offset by a previously reported idiosyncratic institutional client asset reallocation and money market fee waivers. Management fees were up 4% compared to 2Q21, primarily reflecting higher average equity market levels and lower money market fee waivers.

Foreign exchange trading services(a) increased 3% compared to 3Q20, reflecting higher direct sales and trading revenue and indirect volumes, partially offset by lower FX volatility. Compared to 2Q21, Foreign exchange trading services decreased (2)%, mainly due to seasonally lower client FX volumes and indirect spreads.

Securities finance increased 26% compared to 3Q20, mainly reflecting higher client securities loan balances and spreads, as well as new business wins in Enhanced Custody. Securities finance decreased (3)% compared to 2Q21, primarily driven by lower agency balances.

Software and processing fees increased 15% compared to 3Q20, mainly reflecting higher CRD revenues. Software and processing fees decreased (8)% compared to 2Q21, primarily due to the absence of prior quarter CRD episodic fees and client renewals, partially offset by market-related adjustments.

Net interest income (NII) increased 2% compared to 3Q20, primarily driven by higher loan balances and growth in the investment portfolio and deposits, as well as the absence of a 3Q20 true-up,(c) partially offset by lower investment portfolio yields. Compared to 2Q21, NII increased 4%, mainly due to higher loan balances, growth in the investment portfolio, and higher short-term rates, partially offset by lower investment portfolio yields.

Total revenues were positively impacted by currency translation when compared to 3Q20 by $13 million, but adversely impacted when compared to 2Q21 by $15 million.

(a) Certain fees associated with our GLD ETFs have been reclassified from Foreign exchange trading services to Management fees to better reflect the nature of those fees. Prior periods have been reclassified to conform to current-period presentation. These fees were approximately $15 million, $19 million, $24 million, and $23 million in the first, second, third and fourth quarters of 2020, respectively.

(b) Net Interest Margin (NIM) is presented on a fully taxable-equivalent (FTE) basis. Refer to the Addendum for reconciliations of our FTE-basis presentation.

PROVISION FOR CREDIT LOSSES


(Dollars in millions)	3Q21		2Q21		3Q20		% QoQ		% YoY
Allowance for credit losses:
Beginning balance	$	121	$	135	$	163	(10.4)	%	(25.8)	%
Provision for credit losses	(2)		(15)		—		(86.7)		nm
Charge-offs	(1)		(1)		(14)		nm		nm
Other(1)	(1)		2		4		nm		nm
Ending Balance	$	117	$	121	$	153	(3.3)	%	(23.5)	%



(1) Consists primarily of currency translation

Total provision for credit losses reflects a $2 million reserve release in 3Q21.

EXPENSES


(Dollars in millions)	3Q21			2Q21			3Q20			% QoQ			% YoY
Compensation and employee benefits	$	1,054		$	1,077		$	1,062		(2.1)	%		(0.8)	%
Information systems and communications	406			398			395			2.0			2.8
Transaction processing services	253			263			234			(3.8)			8.1
Occupancy	102			100			109			2.0			(6.4)
Acquisition and restructuring costs	18			11			15			63.6			20.0
Amortization of other intangible assets	62			63			59			(1.6)			5.1
Other	221			199			229			11.1			(3.5)
Total Expenses	$	2,116		$	2,111		$	2,103		0.2	%		0.6	%
Total expenses, excluding notable items(a)	$	2,098		$	2,111		$	2,097		(0.6)	%		—	%

Effective tax rate	18.5		%	18.6		%	18.5		%	(10)		bps	—		bps

Compensation and employee benefits decreased (1)% compared to 3Q20, primarily driven by higher salary deferrals and lower headcount, partially offset by higher medical benefits costs. Compensation and employee benefits decreased (2)% compared to 2Q21, primarily reflecting lower headcount and incentive compensation, as well as the impact of currency translation.

Information systems and communications increased 3% and 2% compared to 3Q20 and 2Q21, respectively, mainly reflecting higher technology and infrastructure investments.

Transaction processing services increased 8% compared to 3Q20, primarily due to higher revenue-related costs involving sub-custody volumes and market data. Transaction processing decreased (4)% compared to 2Q21, mainly driven by lower sub-custody volumes and broker fees.

Occupancy decreased (6)% compared to 3Q20, primarily due to footprint optimization. Occupancy increased 2% compared to 2Q21, primarily reflecting site maintenance costs.

Acquisition and restructuring costs increased compared to both 3Q20 and 2Q21, primarily due to costs associated with the proposed acquisition of BBH Investor Services.

Amortization of other intangible assets increased 5% compared to 3Q20, due to a lift-out in 1Q21.(b)

(b) Related to a lift-out of the depository bank and fund administrator activities of Fideuram Bank Luxembourg, a subsidiary of Intesa Sanpaolo.

Other expenses decreased (3)% compared to 3Q20, largely reflecting lower sub-advisory fees and marketing costs, partially offset by the absence of benefits from 3Q20 notable items.(a) Other expenses increased 11% compared to 2Q21, largely reflecting higher professional fees and the absence of benefits from 2Q21 notable items.(a)

Total expenses were adversely impacted by currency translation when compared to 3Q20 by $10 million, but positively impacted when compared to 2Q21 by $14 million.

TAXES

The effective tax rate in 3Q21 of 18.5% was flat compared to both 3Q20 and 2Q21.

CAPITAL AND LIQUIDITY

The following table presents preliminary estimates of regulatory capital and liquidity ratios for State Street Corporation.


(As of period end)	3Q21		2Q21		3Q20
Basel III Standardized Approach:
Common Equity Tier 1 ratio	13.5	%	11.2	%	12.4	%
Tier 1 capital ratio	15.2		12.9		14.7
Total capital ratio	16.6		14.3		15.7

Basel III Advanced Approaches:
Common Equity Tier 1 ratio	13.8		11.8		12.8
Tier 1 capital ratio	15.5		13.5		15.1
Total capital ratio	16.9		14.8		16.0

Tier 1 leverage ratio	6.3		5.2		6.6
Supplementary leverage ratio	7.5		6.7		8.2

Liquidity coverage ratio	105	%	104	%	109	%

Standardized capital ratios were binding for all periods included above.

CET1 ratio (standardized) increased 1.1% points compared to 3Q20, largely reflecting higher retained earnings and the issuance of common stock to finance the proposed acquisition of BBH Investor Services, partially offset by higher risk-weighted assets. CET1 ratio (standardized) increased 2.3% points compared to 2Q21, largely reflecting the issuance of common stock to finance the proposed acquisition of BBH Investor Services, higher retained earnings, and the reduction in risk-weighted assets.

Tier 1 leverage ratio decreased (0.3)% points compared to 3Q20. Tier 1 leverage ratio increased 1.1% points compared to 2Q21, mainly driven by the issuance of common stock to finance the proposed acquisition of BBH Investor Services, the decrease in balance sheet size and higher retained earnings.

Liquidity coverage ratio (LCR) for State Street Corporation was approximately 105%, relatively flat to 2Q21 and down (4)% points from 3Q20. LCR for State Street Bank and Trust was approximately 127%.

INVESTOR CONFERENCE CALL AND QUARTERLY WEBSITE DISCLOSURE

State Street will webcast an investor conference call today, Monday, October 18, 2021, at 10:00 a.m. ET, available at http://investors.statestreet.com/. The conference call will also be available via telephone, at (833) 380-0399 or (236) 714-2093. The Conference ID# is 7539853.

Recorded replays of the conference call will be available on the website and by telephone at (800) 585-8367 or (416) 621-4642 beginning approximately two hours after the call's completion. The Conference ID# is 7539853.

The telephone replay will be available for approximately two weeks following the conference call. This News Release, presentation materials referred to on the conference call and additional financial information are available on State Street's website, at http://investors.statestreet.com/ under “Investor Relations--Investor News & Events" and under the title “Events and Presentations".

State Street intends to publish updates to its public disclosure regarding regulatory capital, as required by the Basel III final rule, and the liquidity coverage ratio, on a quarterly basis on its website at

http:// investors.statestreet.com/, under "Filings & Reports." Those updates will be published each quarter, during the period beginning after State Street's public announcement of its quarterly results of operations and ending on or prior to the due date under applicable bank regulatory requirements (i.e., ordinarily, ending no later than 60 days following year-end or 45 days following each other quarter-end, as applicable). For 3Q21, State Street expects to publish its updates during the period beginning today and ending on or about November 15, 2021.

State Street Corporation (NYSE: STT) is one of the world's leading providers of financial services to institutional investors including investment servicing, investment management and investment research and trading. With $43.3 trillion in assets under custody and/or administration and $3.9 trillion* in assets under management as of September 30, 2021, State Street operates globally in more than 100 geographic markets and employs approximately 39,000 worldwide. For more information, visit State Street's website at www.statestreet.com.

* Assets under management as of September 30, 2021 includes approximately $60 billion of assets with respect to SPDR® products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated.

IN THIS NEWS RELEASE:

•Expenses and other measures are sometimes presented excluding notable items/effects of currency translation. This is a non-GAAP presentation. See the Addendum to this News Release for an explanation and reconciliations of our non-GAAP measures.

•New asset servicing mandates, including announced front-to-back investment servicing clients, may be subject to completion of definitive agreements, approval of applicable boards and shareholders and customary regulatory approvals. New asset servicing mandates and servicing assets remaining to be installed in future periods exclude new business which has been contracted, but for which the client has not yet provided permission to publicly disclose and is not yet installed. These excluded assets, which from time to time may be significant, will be included in new asset servicing mandates and reflected in servicing assets remaining to be installed in the period in which the client provides its permission. Servicing mandates and servicing assets remaining to be installed in future periods are presented on a gross basis and therefore also do not include the impact of clients who have notified us during the period of their intent to terminate or reduce their relationship with State Street, which from time to time may be significant.

•New business in assets to be serviced is reflected in our AUC/A after we begin servicing the assets, and new business in assets to be managed is reflected in our AUM after we begin managing the assets. As such, only a portion of any new asset servicing and asset management mandates may be reflected in our AUC/A and AUM as of any particular date specified. Consistent with past practice, AUC/A values for certain asset classes are based on a lag, typically one-month. Generally, our servicing fee revenues are affected by several factors, including changes in market valuations, client activity and asset flows, net new business and the manner in which we price our services. We provide a range of services to our clients, including core custody services, accounting, reporting and administration and middle office services, and the nature and mix of services provided affects our servicing fees. The basis for fees will differ across regions and clients. The industry in which we operate has historically faced pricing pressure, and our servicing fee revenues are also affected by such pressures today. Consequently, no assumption should be drawn as to future revenue run rate from announced servicing wins or new servicing business yet to be installed, as the amount of revenue associated with AUC/A can vary materially. Management fees generally are affected by our level of AUM and differ based upon the nature, type and investment strategy of the investment product. Management fee revenue is more sensitive to market valuations than servicing fee revenue, as a higher proportion of the underlying services provided, and the associated management fees earned, are dependent on equity and fixed-income security valuations. Additional factors, such as the relative mix of assets managed, may have a significant effect on our management fee revenue. While certain management fees are directly determined by the values of AUM and the investment strategies employed, management fees may reflect other factors, including performance fee arrangements, as well as our relationship pricing for clients.

•CRD bookings, as presented in this News Release, represent signed annual recurring revenue contract value excluding bookings with affiliates, including SSGA. CRD revenue derived from affiliate agreements is eliminated in consolidation for financial reporting purposes.

•CRD annual recurring revenue (ARR), an operating metric, is calculated by annualizing current quarter revenue and includes annualized amount of most software-enabled revenue, including revenue generated from Software-as-a-service, maintenance and support revenue, revenue from the Charles River Network's FIX Network Service (CRN), and value-added services, which are all expected to be recognized ratably over the term of client contracts. ARR excludes software-enabled brokerage revenue. ARR of $213 million, $230 million, and $239 million in 3Q20, 2Q21, and 3Q21, respectively, includes annualized intercompany revenues of $15 million, $21 million, and $21 million, respectively.

•Revenue and pre-tax income reflects the application of ASC 606. Revenue recognition under ASC 606 results in the acceleration of a significant portion of revenues for on-premises software agreements when a client goes live or renews their contract with us. The amount of revenue recognized in any given quarter will be driven in large part by client activity, including agreements that renew or are installed in that quarter.

•Unless otherwise noted, all capital ratios referenced on this News Release and elsewhere in this presentation refer to State Street Corporation, or State Street, and not State Street Bank and Trust Company, or State Street Bank. The lower of capital ratios calculated under the Basel III advanced approaches and under the Basel III standardized approach are applied in the assessment of our capital adequacy for regulatory purposes. Standardized ratios were binding for 3Q21. Refer to the Addendum included with this News Release for additional information. All capital ratios are estimated. Liquidity Coverage Ratio (LCR) is a preliminary estimate based on a quarterly daily average.

•All earnings per share amounts represent fully diluted earnings per common share.

•Return on average common shareholders' equity is determined by dividing annualized net income available to common equity by average common shareholders' equity for the period.

•Quarter-over-quarter (QoQ) is a sequential quarter comparison. Year-on-year (YoY) is the current period compared to the same period a year ago.

•"AUC/A" denotes Assets Under Custody and/or Administration; "AUC" denotes Assets Under Custody; "AUM" denotes Assets Under Management; "nm" denotes not meaningful; "EOP" denotes end of period.

•"FTE" denotes fully taxable-equivalent basis; NIM is presented on an FTE-basis. Refer to the Addendum for reconciliations of our FTE-basis presentation.

•Industry data is provided for illustrative purposes only. It is not intended to reflect State Street's or its clients' activity and is indicative of only selected segments of the entire industry.

◦Morningstar data includes long-term mutual funds, ETF’s and Money Market funds. Mutual fund data represents estimates of net new cash flow, which is new sales minus redemptions combined with net exchanges, while ETF data represents net issuance, which is gross issuance less gross redemptions. Data for Fund of Funds, Feeder funds and Obsolete funds were excluded from the series to prevent double counting. Data is from the Morningstar Direct Asset Flows database.

◦The long-term fund flows reported by Morningstar in North America are composed of US domiciled Market flows mainly in Equities, Allocation and Fixed Income asset classes. 3Q21 data for North America (US domiciled) includes Morningstar actuals for July and August 2021 and Morningstar estimates for September 2021.

◦The long-term funds flows reported by Morningstar direct in EMEA are composed of the European market flows mainly in Equities, Allocation and Fixed Incomes asset classes. 3Q21 data for Europe is on a rolling three month basis for June 2021 through August 2021, sourced by Morningstar.

FORWARD LOOKING STATEMENTS

This News Release (and the conference call referenced herein) contains forward-looking statements within the meaning of United States securities laws, including statements about our goals and expectations regarding our business, financial and capital condition, results of operations, strategies, the financial and market outlook, dividend and stock purchase programs, governmental and regulatory initiatives and developments, expense reduction programs, new client business, and the business environment. Forward-looking statements are often, but not always, identified by such forward-looking terminology as “outlook,” “guidance,” “expect,” “priority,” “objective,” “intend,” “plan,” “forecast,” “believe,” “anticipate,” “estimate,” “seek,” “may,” “will,” “trend,” “target,” “strategy” and “goal,” or similar statements or variations of such terms. These statements are not guarantees of future performance, are inherently uncertain, are based on current assumptions that are difficult to predict and involve a number of risks and uncertainties. Therefore, actual outcomes and results may differ materially from what is expressed in those statements, and those statements should not be relied upon as representing our expectations or beliefs as of any time subsequent to the time this News Release is first issued.

Important factors that may affect future results and outcomes include, but are not limited to:

•The possibility that some or all of the anticipated business, financial, capital, staffing, operational or other benefits or synergies of the acquisition of BBH's Investor Services business will not be realized when expected or at all, including as a result of the impact of, additional costs or unanticipated negative synergies associated with, or problems arising from, the integration of the BBH Investor Services business acquisition (including challenges in transitioning clients, systems, technology or personnel), as a result of regulatory or operational challenges we may experience, as a result of disruptions from the transaction harming relationships with our clients, employees or regulators, or as a result of the strength of the economy and competitive factors in the areas where we and BBH’s Investor Services business do business;

•The failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect us or the expected benefits of the transaction, perhaps materially), to satisfy any of the other conditions to the acquisition or to arrange financing consistent with our expectations or at all, in each case, on a timely basis or at all; and, if delayed, the resulting effects, including in magnitude and timing of the expected financial benefits of the acquisition of BBH's Investor Services business, of a delayed closing of the acquisition (which expected financial effects are presented and determined assuming a closing date of December 31, 2021);

•The occurrence of any event, change or other circumstances that could give rise to the termination of the definitive purchase agreement in respect of the acquisition;

•Potential adverse reactions or changes to client, regulatory, business or employee relationships, including those resulting from the announcement or completion of the acquisition;

•Demand for the products and services of State Street and of BBH’s Investor Services business;

•We are subject to intense competition, which could negatively affect our profitability;

•We are subject to significant pricing pressure and variability in our financial results and our AUC/A and AUM;

•Our development and completion of new products and services, including State Street Alpha, may involve costs and dependencies and expose us to increased risk;

•Our business may be negatively affected by our failure to update and maintain our technology infrastructure;

•The COVID-19 pandemic continues to create significant risks and uncertainties for our business;

•Acquisitions, strategic alliances, joint ventures and divestitures, and the integration, retention and development of the benefits of our acquisitions, pose risks for our business;

•The integration of BBH Investor Services may be more difficult, costly or time consuming than expected, and the anticipated benefits and cost synergies may not be fully realized;

•Competition for qualified members of our workforce is intense, and we may not be able to attract and retain the highly skilled people we need to support our business;

•We could be adversely affected by geopolitical, economic and market conditions;

•We have significant International operations, and disruptions in European and Asian economies could have an adverse effect on our consolidated results of operations or financial condition;

•Our investment securities portfolio, consolidated financial condition and consolidated results of operations could be adversely affected by changes in the financial markets;

•Our business activities expose us to interest rate risk;

•We assume significant credit risk to counterparties, who may also have substantial financial dependencies with other financial institutions, and these credit exposures and concentrations could expose us to financial loss;

•Our fee revenue represents a significant portion of our consolidated revenue and is subject to decline based on, among other factors, the investment activities of our clients;

•If we are unable to effectively manage our capital and liquidity, our consolidated financial condition, capital ratios, results of operations and business prospects could be adversely affected;

•We may need to raise additional capital or debt in the future, which may not be available to us or may only be available on unfavorable terms;

•If we experience a downgrade in our credit ratings, or an actual or perceived reduction in our financial strength, our borrowing and capital costs, liquidity and reputation could be adversely affected;

•Our business and capital-related activities, including common share repurchases, may be adversely affected by capital and liquidity standards required as a result of capital stress testing;

•We face extensive and changing government regulation in the jurisdictions in which we operate, which may increase our costs and compliance risks;

•We are subject to enhanced external oversight as a result of the resolution of prior regulatory or governmental matters;

•Our businesses may be adversely affected by government enforcement and litigation;

•Any misappropriation of the confidential information we possess could have an adverse impact on our business and could subject us to regulatory actions, litigation and other adverse effects;

•Our calculations of risk exposures, total RWA and capital ratios depend on data inputs, formulae, models, correlations and assumptions that are subject to change, which could materially impact our risk exposures, our total RWA and our capital ratios from period to period;

•Changes in accounting standards may adversely affect our consolidated financial statements;

•Changes in tax laws, rules or regulations, challenges to our tax positions and changes in the composition of our pre-tax earnings may increase our effective tax rate;

•The transition away from LIBOR may result in additional costs and increased risk exposure;

•Our control environment may be inadequate, fail or be circumvented, and operational risks could adversely affect our consolidated results of operations;

•Cost shifting to non-U.S. jurisdictions and outsourcing may expose us to increased operational risk and reputational harm and may not result in expected cost savings;

•If we, or the third parties with which we do business, experience failures, attacks or unauthorized access to our or their respective information technology systems or facilities, or disruptions to our continuous operations, this could result in significant costs, reputational damage and limits on our business activities;

•Long-term contracts expose us to pricing and performance risk;

•Our businesses may be negatively affected by adverse publicity or other reputational harm;

•We may not be able to protect our intellectual property;

•The quantitative models we use to manage our business may contain errors that could result in material harm;

•Our reputation and business prospects may be damaged if our clients incur substantial losses or are restricted in redeeming their interests in investment pools that we sponsor or manage;

•The impacts of climate change could adversely affect our business operations;

•We may incur losses as a result of unforeseen events including terrorist attacks, natural disasters, the emergence of a new pandemic or acts of embezzlement.

Other important factors that could cause actual results to differ materially from those indicated by any forward-looking statements are set forth in our 2020 Annual Report on Form 10-K and our subsequent SEC filings. We encourage investors to read these filings, particularly the sections on risk factors, for additional information with respect to any forward-looking statements and prior to making any investment decision. The forward-looking statements contained in this News Release (and the conference call referenced herein) should not by relied on as representing our expectations or beliefs as of any time subsequent to the time this News Release is first issued, and we do not undertake efforts to revise those forward-looking statements to reflect events after that time.